Banks rerate 17% due to recovery trade: Maybank

The recovery trade is driven by news of successful COVID-19 vaccine trials.

Singaporean banks have rerated 17% since the end of October, primarily due to recovery trade catalysed by successful COVID-19 vaccine trials, according to a newly released sector analysis report by Maybank Kim Eng.

However, uncertainty that prevailed in October would remain. “Nonperforming loans are set to rise (to 2.1% next year) as moratoriums ease whilst borders remain closed, net interest margins continue to be under pressure and dividend caps are unlikely to be lifted in 2021E,” said the report.

In June, a similar hike was observed as regional circuit breakers were eased, yet it was short-lived as the expected V-shaped recovery didn’t materialise.

Banks largely maintained “bearish credit charge guidance” in Q3. “Whilst we expect overall sector allowances to fall 46% YoY in 2021E, this is off a high base,” commented Maybank Kim Eng, noting that the rate was still 13% than the one logged in 2017.

Whilst GDP expectations in Singapore will grow 4.5%, following a -5.5% contraction in 2020E, it would not be sufficient to go back to 2019 levels.

The report also stated that banks were currently “trading near the ceiling of the peak-to-trough channel established this year.

Reaching the people who run Asia's businesses is harder than it used to be.

Inboxes are crowded. Attention is short. The executives you most want to reach — the founders, CFOs, and operators who actually move budgets — are the hardest to find through the usual channels. If you're building a company, a category, or a reputation, you already know this.

We've spent twenty years building the room they read. Singapore Business Review is where senior decision makers in Singapore and across Southeast Asia come for business coverage they can't get elsewhere — in print, online, and in person at the summits and roundtables we host across seven markets.

If you have something these readers should know about — a point of view worth publishing, a product worth their attention, an event worth their time — we'd like to hear what you're trying to do.

Book a meeting

| Or download the media kit (PDF)

240,000 senior readers quarterly in print Top 1,700 Singapore companies reached

7 markets across Southeast Asia